TAXES CONSOLIDATION ACT, 1997

• (2) Where at any time an individual (in this subsection referred to as “the successor”) succeeds to a trade or profession which immediately before that time was carried on by another individual or by a partnership of persons (including a partnership in which the successor was a partner), the income tax payable for all years of assessment by the successor shall be computed as if the successor had set up or commenced the trade or profession at that time.

• (3) In the case of the death of a person who, if he or she had not died, would under this section have become chargeable to income tax for any year, the tax which would have been so chargeable shall be assessed and charged on such person's executors or administrators, and shall be a debt due from and payable out of such person's estate.

CHAPTER 4 Income tax: basis of assessment under Cases III, IV and V

70 Case III: basis of assessment. [ITA67 s75 and s77(1), (2) and (5); FA90 s17(1)(a)(i) and (iii); FA97 s146(1) and Sch9 PtI par1(5)]

70.—(1) Income or profits chargeable under Case III of Schedule D shall, for the purposes of ascertaining liability to income tax, be deemed to issue from a single source, and this section shall apply accordingly.

• (2) Income tax under Case III of Schedule D shall be computed on the full amount of the profits or income arising within the year of assessment.

• (3) Income tax shall, subject to section 71, be paid on the actual amount computed in accordance with subsection (2) without any deduction.

• (4) Subsection (2) shall, in cases where income tax is to be computed by reference to the amount of income received in the State, apply as if the reference in that subsection to income arising were a reference to income so received.

71 Foreign securities and possessions. [ITA67 s76(1), (2)(a), (3), (5) and (6); F(MP)A68 s3(2) and Sch PtI; FA74 s46; FA90 s17(1)(a)(ii); FA97 s146(1) and Sch9 PtI par1(4)]

71.—(1) Subject to this section and section 70, income tax chargeable under Case III of Schedule D in respect of income arising from securities and possessions in any place outside the State shall be computed on the full amount of such income arising in the year of assessment whether the income has been or will be received in the State or not, subject to, in the case of income not received in the State—

• (a) the same deductions and allowances as if it had been so received,

• (b) the deduction, where such deduction cannot be made under, and is not forbidden by, any other provision of the Income Tax Acts, of any sum paid in respect of income tax in the place where the income has arisen, and

• (c) a deduction on account of any annuity or other annual payment (apart from annual interest) payable out of the income to a person not resident in the State,

and the provisions of the Income Tax Acts (including those relating to the delivery of statements) shall apply accordingly.

• (2) Subsection (1) shall not apply to any person who satisfies the Revenue Commissioners that he or she is not domiciled in the State, or that, being a citizen of Ireland, he or she is not ordinarily resident in the State.

• (3) In the cases mentioned in subsection (2), the tax shall, subject to section 70, be computed on the full amount of the actual sums received in the State from remittances payable in the State, or from property imported, or from money or value arising from property not imported, or from money or value so received on credit or on account in respect of such remittances, property, money or value brought into the State in the year of assessment without any deduction or abatement.

• (4) Income arising outside the State which if it had arisen in the State would be chargeable under Case V of Schedule D shall be deemed to be income to which sections 75 and 97 apply, in so far as those sections relate to deductions to be made by reference to section 97(2)(e).

• (5) Any person aggrieved by a decision of the Revenue Commissioners on any question as to domicile or ordinary residence arising under subsection (2) may, by notice in writing to that effect given to the Revenue Commissioners within 2 months from the date on which notice of the decision is given to him or her, make an application to have his or her claim for relief heard and determined by the Appeal Commissioners.

• (6) Where an application is made under this section, the Appeal Commissioners shall hear and determine the claim in the like manner as an appeal made to them against an assessment, and the provisions of the Income Tax Acts relating to such an appeal (including the provisions relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law) shall apply accordingly with any necessary modifications.

72 Charge to tax on sums applied outside the State in repaying certain loans. [FA71 s4(1) to (4) and (6); FA97 s15]

72.—(1) For the purposes of this section—

• (a) a debt for money loaned shall, to the extent to which that money is applied in or towards satisfying another debt, be deemed to be a debt incurred for satisfying that other debt, and a debt incurred for satisfying in whole or in part a debt within subsection (2)(c) shall itself be treated as within that subsection, and

• (b) “lender”, in relation to any money loaned, includes any person for the time being entitled to repayment.

• (2) For the purposes of section 71(3), any income arising from securities and possessions in any place outside the State which is applied outside the State by a person ordinarily resident in the State in or towards satisfaction of—

• (a) any debt for money loaned to such person in the State or for interest on money so loaned,

• (b) any debt for money loaned to such person outside the State and received in or brought to the State, or

• (c) any debt incurred for satisfying in whole or in part a debt within paragraph (a) or (b),

shall be treated as received by such person in the State and as so received from remittances payable in the State.

• (3) Where a person ordinarily resident in the State receives in or brings to the State money loaned to such person outside the State, but the debt for that money is wholly or partly satisfied before such person does so, subsection (2) shall apply as if the money had been received in or brought to the State before the debt was so satisfied, except that any sums treated by virtue of that subsection as received in the State shall be treated as so received at the time when the money so loaned is actually received in or brought to the State.

• (4) Where a person is indebted for money loaned to him or her, income applied by the person in such a way that the money or property representing the income is held by the lender on behalf of or to the account of the person in such circumstances as to be available to the lender for the purpose of satisfying or reducing the debt by set-off or otherwise shall be treated as applied by the person in or towards its satisfaction if, under any arrangement between the person and the lender, the amount for the time being of the person's indebtedness to the lender, or the time at which it is to be repaid in whole or in part, depends in any respect directly or indirectly on the amount or value so held by the lender.

• (5) In relation to income applied in or towards satisfaction of a debt for money loaned on or after the 20th day of February, 1997, or a debt incurred for satisfying in whole or in part any such debt, this section shall apply as if the references to ordinarily resident in the State in subsections (2) and (3) were references to resident or ordinarily resident in the State.

73 Income from certain possessions in Great Britain or Northern Ireland. [ITA67 Sch6 PtIII par1; F(MP)A68 s3(2) and Sch PtI; FA69 s21; FA90 s17(1)(b); FA97 s146(1) and Sch9 PtI par1(36)]

73.—(1) In this section, “rents” includes any payment in the nature of a royalty and any annual or periodical payment in the nature of a rent derived from any lands, tenements or hereditaments, including lands, tenements and hereditaments to which section 56 would apply or would have applied if such lands, tenements and hereditaments were situate in the State.

• (2) In respect of property situate and profits or gains arising in Great Britain or Northern Ireland—

• (a) sections 70 and 71 shall apply as if section 71(2) were deleted, and

• (b) subsection (3) shall apply for the purposes of Case III of Schedule D, notwithstanding anything to the contrary in section 70 or 71.

• (3)
• (a) Income tax in respect of income arising from possessions in Great Britain or Northern Ireland, other than stocks, shares, rents or the occupation of land, shall be computed either—

• (i) on the full amount of such income arising in the year of assessment, or

• (ii) on the full amount of such income on an average of such period as the case may require and as may be directed by the Appeal Commissioners,

so that according to the nature of the income the tax may be computed on the same basis as that on which it would have been computed if the income had arisen in the State, and subject in either case to a deduction on account of any annuity or other annual payment (apart from annual interest) payable out of the income to a person not resident in the State, and the provisions of the Income Tax Acts (including those relating to the delivery of statements) shall apply accordingly.

• (b) The person chargeable and assessable in accordance with paragraph (a) shall be entitled to the same allowances, deductions and reliefs as if the income had arisen in the State.

74 Case IV: basis of assessment. [ITA67 s79; FA96 s132(1) and Sch5 PtI par1 (2)]

74.—(1) Income tax under Case IV of Schedule D shall be computed either on the full amount of the profits or gains arising in the year of assessment or according to the average of such a period, not being greater than one year, as the case may require and as may be directed by the inspector.

• (2) The nature of the profits or gains chargeable to income tax under Case IV of Schedule D, and the basis on which the amount of such profits or gains has been computed, including the average, if any, taken on such profits or gains, shall be stated to the inspector.

• (3) Every such statement and computation shall be made to the best of the knowledge and belief of the person in receipt of or entitled to the profits or gains.

75 Case V: basis of assessment. [ITA67 s81(1), (2) and (3)(a) and s86; FA69 s22, s33(1) and Sch4 PtI and s65(1) and Sch5 PtI; FA90 s18(1)(a)]

75.—(1) Without prejudice to any other provision of the Income Tax Acts, the profits or gains arising from—

• (a) any rent in respect of any premises, and

• (b) any receipts in respect of any easement,

shall, subject to and in accordance with the provisions of the Income Tax Acts, be deemed for the purposes of those Acts to be annual profits or gains within Schedule D, and the person entitled to such profits or gains shall be chargeable in respect of such profits or gains under Case V of that Schedule; but such rent or such receipts shall not include any payments to which section 104 applies.

• (2) Profits or gains chargeable under Case V of Schedule D shall, for the purposes of ascertaining liability to income tax, be deemed to issue from a single source, and subsection (3) shall apply accordingly.

• (3) Tax under Case V of Schedule D shall be computed on the full amount of the profits or gains arising within the year of assessment.

• (4) Neither this section nor section 97 or 384 shall apply to a case in which the rent reserved under a lease (including, in the case of a lease granted on or after the 6th day of April, 1963, the duration of which does not exceed 50 years, an appropriate sum in respect of any premium payable under the lease) is insufficient, taking one year with another, to defray the cost to the lessor of fulfilling such lessor's obligations under the lease and of meeting any expense of maintenance, repairs, insurance and management of the premises subject to the lease which falls to be borne by such lessor.

• (5) Section 96 shall apply for the interpretation of this section as it applies for the interpretation of Chapter 8 of this Part.

CHAPTER 5 Computational provisions: corporation tax

76 Computation of income: application of income tax principles. [CTA76 s11(1), (2)(b) and (3) to (8); FA96 s132(2) and Sch5 PtII]

76.—(1) Except where otherwise provided by the Tax Acts, the amount of any income shall for the purposes of corporation tax be computed in accordance with income tax principles, all questions as to the amounts which are or are not to be taken into account as income, or in computing income, or charged to tax as a person's income, or as to the time when any such amount is to be treated as arising, being determined in accordance with income tax law and practice as if accounting periods were years of assessment.

• (2) For the purposes of this section, “income tax law”, in relation to any accounting period, means the law applying to the charge on individuals of income tax for the year of assessment in which that accounting period ends, but does not include such of the enactments of the Income Tax Acts so applying as make special provision for individuals in relation to matters referred to in subsection (1).

• (3) Accordingly, for the purposes of corporation tax, income shall be computed and the assessment shall be made under the like Schedules and Cases as apply for the purposes of income tax, and in accordance with the provisions applicable to those Schedules and Cases, but (subject to the Corporation Tax Acts) the amounts so computed for several sources of income, if more than one, together with any amounts to be included in respect of chargeable gains, shall be aggregated to arrive at the total profits.

• (4) Nothing in this section shall be taken to mean that income arising in any period is to be computed by reference to any other period (except in so far as this results from apportioning to different parts of a period income of the whole period).

• (5) Subject to section 77 and to any enactment applied by this section which expressly authorises such a deduction, no deduction shall be made for the purposes of the Corporation Tax Acts in computing income from any source—

• (a) in respect of dividends or other distributions, or

• (b) in respect of any yearly interest, annuity or other annual payment or any other payments mentioned in section 104 or 237(2), but not including sums which are, or but for any exemption would be, chargeable under Case V of Schedule D.

• (6) Without prejudice to the generality of subsection (1), any provision of the Income Tax Acts, or of any other statute, which confers an exemption from income tax, provides for the disregarding of a loss, or provides for a person to be charged to income tax on any amount (whether expressed to be income or not, and whether an actual amount or not), shall, except where otherwise provided, have the like effect for the purposes of corporation tax.

• (7) This section shall not have effect so as to apply for the purposes of corporation tax anything in section 71.

• (8) Where by virtue of this section or otherwise any enactment applies both to income tax and to corporation tax—

• (a) that enactment shall not be affected in its operation by the fact that income tax and corporation tax are distinct taxes but, in so far as is consistent with the Corporation Tax Acts, shall apply in relation to income tax and corporation tax as if they were one tax, so that, in particular, a matter which in a case involving 2 individuals is relevant for both of them in relation to income tax shall in a like case involving an individual and a company be relevant for such individual in relation to income tax and for such company in relation to corporation tax, and

• (b) for that purpose, references in any such enactment to a relief from or charge to income tax or to a specified provision of the Income Tax Acts shall, in the absence of or subject to any express adaptation, be construed as being or including a reference to any corresponding relief from or charge to corporation tax or to any corresponding provision of the Corporation Tax Acts.

77 Miscellaneous special rules for computation of income. [CTA76 s12(1) to (7)]

77.—(1) For the purposes of corporation tax, income tax law as applied by section 76 shall apply subject to subsections (2) to (7).

• (2)
• (a) Where a company begins or ceases to carry on a trade, or to be within the charge to corporation tax in respect of a trade, the company's income shall be computed as if that were the commencement or, as the case may be, discontinuance of the trade, whether or not the trade is in fact commenced or discontinued.

• (b) Notwithstanding paragraph (a), where any provision of the Income Tax Acts is applied for corporation tax by the Corporation Tax Acts, this subsection shall not apply for any purpose of that provision if under any enactment a trade is not to be treated as permanently discontinued for the corresponding income tax purpose.

• (3) In computing income from a trade, section 76(5)(b) shall not prevent the deduction of yearly interest.

• (4) In computing a company's income for any accounting period from the letting of rights to work minerals in the State, there may be deducted any sums disbursed by the company wholly, exclusively and necessarily as expenses of management or supervision of those minerals in that period; but any enactments restricting the relief from income tax that might be given under section 111 shall apply to restrict in the like manner the deductions that may be made under this subsection.

• (5) Where a company is chargeable to corporation tax in respect of a trade under Case III of Schedule D, the income from the trade shall be computed in accordance with the provisions applicable to Case I of Schedule D.

• (6) The amount of any income arising from securities and possessions in any place outside the State shall be treated as reduced (where such a deduction cannot be made under, and is not forbidden by, any provision of the Income Tax Acts applied by the Corporation Tax Acts) by any sum paid in respect of income tax in the place where the income has arisen.

• (7) Paragraphs (e) and (f) of Case III of Schedule D in section 18(2) shall for the purposes of corporation tax extend to companies not resident in the State, in so far as those companies are chargeable to tax on income of descriptions which, in the case of companies resident in the State, are within those paragraphs (but without prejudice to any provision of the Income Tax Acts specially exempting non-residents from income tax on any particular description of income).

78 Computation of companies' chargeable gains. [CTA76 s13(1), (1A), (1B), (1C), (2), (3)(a) and (c), (4) and (5); FA82 s31(1); FA88 Sch3 PtI par1(b); FA97 s59(2) and Sch6 PtI par1]

78.—(1) Subject to this section, the amount to be included in respect of chargeable gains in a company's total profits for any accounting period shall be determined in accordance with subsection (3) after taking into account subsection (2).

• (2) Where for an accounting period chargeable gains accrue to a company, an amount of capital gains tax shall be calculated as if, notwithstanding any provision to the contrary in the Corporation Tax Acts, capital gains tax were to be charged on the company in respect of those gains in accordance with the Capital Gains Tax Acts, and as if accounting periods were years of assessment; but, in calculating the amount of capital gains tax, section 31 shall apply as if the reference in that section to deducting allowable losses were a reference to deducting relevant allowable losses.

• (3)
• (a) The amount referred to in subsection (1) shall be an amount which, if (before making any deduction from the amount) it were charged to corporation tax as profits of the company arising in the accounting period at the rate specified in section 21(1), would produce an amount of corporation tax equal to the amount of capital gains tax calculated for that accounting period in accordance with subsection (2).

• (b) For the purposes of paragraph (a), where part of the accounting period falls in one financial year (in this paragraph referred to as the “first-mentioned financial year”) and the other part falls in the financial year succeeding the first-mentioned financial year and different rates are in force under section 21(1) for each of those years, “the rate specified in section 21(1)” shall be deemed to be a rate per cent determined by the formula—

(A × C) ______ E	+	(B × D) ______ E

where—

A is the rate per cent in force for the first-mentioned financial year,

B is the rate per cent in force for the financial year succeeding the first-mentioned financial year,

C is the length of that part of the accounting period falling in the first-mentioned financial year,

D is the length of that part of the accounting period falling in the financial year succeeding the first-mentioned financial year, and

E is the length of the accounting period.

• (c) Paragraph (b) shall apply as respects accounting periods ending on or after the 1st day of April, 1997, as if—

• (i) the period beginning on the 1st day of January, 1996, and ending on the 31st day of March, 1997, and

• (ii) the period beginning on the 1st day of April, 1997, and ending on the 31st day of December, 1998,

were each a financial year.

• (4) In subsection (2)—

“chargeable gains” does not include chargeable gains accruing on relevant disposals within the meaning of section 648;

“relevant allowable losses” means any allowable losses accruing to the company in the accounting period and any allowable losses previously accruing to the company while it has been within the charge to corporation tax in so far as they have not been allowed as a deduction from chargeable gains accruing in any previous accounting period.

• (5) Except where otherwise provided by the Corporation Tax Acts, chargeable gains and allowable losses shall for the purposes of corporation tax be computed in accordance with the principles applying for capital gains tax, all questions as to the amounts which are or are not to be taken into account as chargeable gains or as allowable losses, or in computing gains or losses, or charged to tax as a person's gain, or as to the time when any such amount is to be treated as accruing, being determined in accordance with the provisions relating to capital gains tax as if accounting periods were years of assessment.

• (6) Subject to subsection (8), where the enactments relating to capital gains tax contain any reference to income tax or to the Income Tax Acts, the reference shall, in relation to a company, be construed as a reference to corporation tax or to the Corporation Tax Acts; but—

• (a) this subsection shall not affect the references to income tax in section 554(2), and

• (b) in so far as those enactments operate by reference to matters of any specified description, for corporation tax account shall be taken of matters of that description which are confined to companies, but not of any such matters which are confined to individuals.

• (7) The Capital Gains Tax Acts as extended by this section shall not be affected in their operation by the fact that capital gains tax and corporation tax are distinct taxes but, in so far as is consistent with the Corporation Tax Acts, shall apply in relation to capital gains tax and corporation tax on chargeable gains as if they were one tax, so that, in particular, a matter which in a case involving 2 individuals is relevant for both of them in relation to capital gains tax shall in a like case involving an individual and a company be relevant for such individual in relation to capital gains tax and for such company in relation to corporation tax.

• (8) Where assets of a company are vested in a liquidator, this section and the enactments applied by this section shall apply as if the assets were vested in, and the acts of the liquidator in relation to the assets were the acts of, the company (acquisitions from or disposals to the liquidator by the company being disregarded accordingly).

79 Foreign currency: computation of income and chargeable gains. [CTA76 s12A; FA94 s56(a); FA96 s45(1)]

79.—(1) (a) In this section—

“profit and loss account” means—

• (i) in the case of a company (in this definition referred to as the “resident company”) resident in the State, the account of that company, and

• (ii) in the case of a company (in this definition referred to as the “non-resident company”) not resident in the State but carrying on a trade in the State through a branch or agency, the account of the business of the company carried on through or from such branch or agency,

which, in the opinion of the auditor appointed under section 160 of the Companies Act, 1963, or under the law of the State in which the resident company or non-resident company, as the case may be, is incorporated and which corresponds to that section, presents a true and fair view of the profit or loss of the resident company or the business of the non-resident company, as the case may be;

“rate of exchange” means a rate at which 2 currencies might reasonably be expected to be exchanged for each other by persons dealing at arm's length or, where the context so requires, an average of such rates;

“relevant contract”, in relation to a company, means any contract entered into by the company for the purpose of eliminating or reducing the risk of loss being incurred by the company due to a change in the value of a relevant monetary item, being a change resulting directly from a change in a rate of exchange;

“relevant monetary item”, in relation to a company, means money held or payable by the company for the purposes of a trade carried on by it;

“relevant tax contract”, in relation to an accounting period of a company, means any contract entered into by the company for the purpose of eliminating or reducing the risk of loss being incurred by the company due to a change in the value of money payable in discharge of a liability of the company to corporation tax for the accounting period, being a change resulting directly from a change in a rate of exchange of the functional currency (within the meaning of section 402) of the company for the currency of the State.

• (b) The treatment of a contract entered into by a company as a relevant contract for the purposes of this section shall be disregarded for any other purpose of the Tax Acts.

• (2) Notwithstanding section 76, for the purposes of corporation tax, the amount of any gain or loss, whether realised or unrealised, which—

• (a) is attributable to any relevant monetary item or relevant contract of a company,

• (b) results directly from a change in a rate of exchange, and

• (c) is properly credited or debited, as the case may be, to the profit and loss account of the company,

shall be taken into account in computing the trading income of the company.

• (3)
• (a) Notwithstanding section 78, for the purposes of corporation tax, where any gain or loss arises to a company in respect of—

• (i) a relevant contract of the company, or

• (ii) money held by the company for the purposes of a trade carried on by it,

so much of that gain or loss as results directly from a change in a rate of exchange shall not be a chargeable gain or an allowable loss, as the case may be, of the company.

• (b) This subsection shall not apply as respects any gain or loss arising to a company carrying on life business within the meaning of section 706(1), being a company which is not charged to corporation tax in respect of that business under Case I of Schedule D.

• (4) Notwithstanding section 78, so much of the amount of any gain or loss arising to a company which carries on a trade in the State in an accounting period as—

• (a) is attributable to any relevant tax contract in relation to the accounting period,

• (b) results directly from a change in a rate of exchange, and

• (c) (i) where it is a gain, does not exceed the amount of the loss which, if the company had not entered into the relevant tax contract, would have been incurred by the company, and

• (ii) where it is a loss, does not exceed the amount of the gain which, if the company had not entered into the relevant tax contract, would have arisen to the company,

due to a change in the value of money payable in discharge of a liability of the company to corporation tax for the accounting period,

shall not be a chargeable gain or an allowable loss, as the case may be, of the company.

80 Taxation of certain foreign currencies. [FA93 s47(1) and (2)]

80.—(1) In this section—

“relevant liability”, in relation to an accounting period, means relevant principal—

• (a) denominated in a currency other than the currency of the State, and

• (b) the interest in respect of which—

• (i) is to be treated as a distribution for the purposes of the Corporation Tax Acts, and

• (ii) is computed on the basis of a rate which, at any time in that accounting period, exceeds 80 per cent of the specified rate at that time;

“relevant principal” means an amount of money advanced to a borrower by a company, the ordinary trading activities of which include the lending of money, where—

• (a) the consideration given by the borrower for that amount is a security within subparagraph (ii), (iii)(I) or (v) of section 130(2)(d), and

• (b) interest or any other distribution is paid out of the assets of the borrower in respect of that security;

“specified rate” means—

• (a) the rate known as the 3 month Dublin Interbank Offered Rate, a record of which is maintained by the Central Bank of Ireland, or

• (b) where such a record was not maintained, the rate known as the Interbank market 3 month fixed rate as published in the statistical appendices of the bulletins and annual reports of the Central Bank of Ireland.

• (2) Notwithstanding any other provision of the Tax Acts or the Capital Gains Tax Acts, a profit or loss from any foreign exchange transaction, being a profit or loss which arises in an accounting period—

• (a) in connection with relevant principal which, in relation to the accounting period, is a relevant liability, and

• (b) to a company which, in relation to that relevant liability, is the borrower,

shall for the purposes of those Acts be deemed to be a profit or gain or a loss, as the case may be, of the trade carried on by the borrower in the course of which trade the relevant liability is used.

CHAPTER 6 Computational provisions: general

81 General rule as to deductions. [ITA67 s57 and s61; FA69 s 65(1) and Sch 5 PtI; FA74 s42(1); FA97 s146(1) and Sch9 PtI par1 (3)]

81.—(1) The tax under Cases I and II of Schedule D shall be charged without any deduction other than is allowed by the Tax Acts.

• (2) Subject to the Tax Acts, in computing the amount of the profits or gains to be charged to tax under Case I or II of Schedule D, no sum shall be deducted in respect of—

• (a) any disbursement or expenses, not being money wholly and exclusively laid out or expended for the purposes of the trade or profession;

• (b) any disbursements or expenses of maintenance of the parties, their families or establishments, or any sums expended for any other domestic or private purposes distinct from the purposes of such trade or profession;

• (c) the rent of any dwelling house or domestic offices or any part of any dwelling house or domestic offices, except such part thereof as is used for the purposes of the trade or profession, and, where any such part is so used, the sum so deducted shall be such as may be determined by the inspector and shall not, unless in any particular case the inspector is of the opinion that having regard to all the circumstances some greater sum ought to be deducted, exceed two-thirds of the rent bona fide paid for that dwelling house or those domestic offices;

• (d) any sum expended for repairs of premises occupied, or for the supply, repairs or alterations of any implements, utensils or articles employed, for the purposes of the trade or profession, over and above the sum actually expended for those purposes;

• (e) any loss not connected with or arising out of the trade or profession;

• (f) any capital withdrawn from, or any sum employed or intended to be employed as capital in, the trade or profession;

• (g) any capital employed in improvements of premises occupied for the purposes of the trade or profession;

• (h) any interest which might have been made if any such sums as aforesaid had been laid out at interest;

• (i) any debts, except bad debts proved to be such to the satisfaction of the inspector and doubtful debts to the extent that they are respectively estimated to be bad and, in the case of the bankruptcy or insolvency of a debtor, the amount which may reasonably be expected to be received on any such debts shall be deemed to be the value of any such debts;

• (j) any average loss over and above the actual amount of loss after adjustment;

• (k) any sum recoverable under an insurance or contract of indemnity;

• (l) any annuity or other annual payment (other than interest) payable out of the profits or gains;

• (m) any royalty or other sum paid in respect of the user of a patent.

82 Pre-trading expenditure. [FA97 s29(1) and (4) to (6)]

82.—(1) This section shall apply to expenditure incurred for the purposes of a trade or profession set up and commenced on or after the 22nd day of January, 1997.

• (2) Subject to subsection (3), where a person incurs expenditure for the purposes of a trade or profession before the time that the trade or profession has been set up and commenced by that person, and such expenditure—

• (a) is incurred not more than 3 years before that time, and

• (b) is apart from this section not allowable as a deduction for the purpose of computing the profits or gains of the trade or profession for the purposes of Case I or II of Schedule D, but would have been so allowable if it had been incurred after that time,

then, the expenditure shall be treated for that purpose as having been incurred at that time.

• (3) The amount of any expenditure to be treated under subsection (1) as incurred at the time that a trade or profession has been set up and commenced shall not be so treated for the purposes of section 381, 396(2), 420, 455(3) or 456.

• (4) An allowance or deduction shall not be made under any provision of the Tax Acts other than this section in respect of any expenditure or payment which is treated under this section as incurred on the day on which a trade or profession is set up and commenced.

83 Expenses of management of investment companies. CTA76 s15.

83.—(1) For the purposes of this section and of the other provisions of the Corporation Tax Acts relating to expenses of management, “investment company” means any company whose business consists wholly or mainly of the making of investments, and the principal part of whose income is derived from the making of investments, but includes any savings bank or other bank for savings.

• (2) In computing for the purposes of corporation tax the total profits for any accounting period of an investment company resident in the State—

• (a) there shall be deducted any sums disbursed as expenses of management (including commissions) for that period, except any such expenses as are deductible in computing income for the purposes of Case V of Schedule D; but

• (b) there shall be deducted from the amount treated as expenses of management the amount of any income derived from sources not charged to tax, other than franked investment income.

• (3) Where in any accounting period of an investment company the expenses of management deductible under subsection (2), together with any charges on income paid in the accounting period wholly and exclusively for the purposes of the company's business, exceed the amount of the profits from which they are deductible, the excess shall be carried forward to the succeeding accounting period, and the amount so carried forward shall be treated for the purposes of this section (other than subsection (5)), including any further application of this subsection, as if it had been disbursed as expenses of management for that accounting period.

• (4) For the purposes of subsections (2) and (3), there shall be added to a company's expenses of management in any accounting period the amount of any allowances to be made to the company for that period by virtue of section 109 or 774.

• (5)
• (a) Where an investment company proves that in any accounting period it has received franked investment income, it shall be entitled to claim payment of the amount of the tax credit comprised in so much of that income as is equal to the amount of any excess for the accounting period computed under subsection (3), but excluding any amount carried forward from a previous accounting period.

• (b) Any excess in respect of which relief is given under this subsection shall not be carried forward undersubsection (3).

• (6)
• (a) Notice of any claim under subsection (5), together with the particulars of that claim, shall be given in writing to the inspector within 2 years after the end of the accounting period in respect of which the claim is made.

• (b) Where the inspector objects to such claim, the Appeal Commissioners shall hear and determine the claim in the like manner as in the case of an appeal to them against an assessment under Schedule D, and the provisions of the Income Tax Acts relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

84 Expenses in relation to establishment or alteration of superannuation schemes. [ITA67 s63; FA72 s13(4) and Sch1 PtIII par 1, and s46(2) and Sch4 PtII]

84.—Where a superannuation scheme is established in connection with a trade or undertaking or a superannuation scheme so established is altered, and the person by whom the trade or undertaking is carried on makes a payment in respect of expenses (including a payment in respect of professional fees, but not including a payment by means of contribution towards the cost of providing the benefits payable under the scheme) in connection with such establishment or alteration, then, if the scheme or, as the case may be, the altered scheme is approved by the Revenue Commissioners under section 772, the amount of the payment shall be allowed to be deducted in the computation, for the purposes of assessment to tax, of the profits or gains of the trade or undertaking as an expense incurred when the payment is made.

85 Deduction for certain industrial premises. [ITA67 s67(1), (2), (3) and (3A); FA69 s31]

85.—(1) In this section, “premises” means an industrial building or structure within the meaning of section 268 which is not a building or structure to which section 272 applies.

• (2) In estimating the amount of annual profits or gains arising or accruing from any trade the profits of which are chargeable to tax under Case I of Schedule D, there shall be allowed to be deducted, as expenses incurred in any year on account of any premises owned by the person carrying on that trade and occupied by such person for the purposes of that trade, a deduction equal to five-twelfths of the rateable valuation of those premises.

• (3) In estimating the profits for any year of any of the concerns which by virtue of section 18(2) are charged under Case I(b) of Schedule D, there shall be allowed to be deducted, as expenses incurred in any year on account of any premises owned by the person carrying on the concern and occupied by such person for the purposes of that concern, a deduction equal to five-twelfths of the rateable valuation of those premises.

• (4)
• (a) Where, in the case of property valued under the Valuation Acts as a unit, a part is and a part is not premises, the rateable valuation of each part shall be arrived at by apportionment of the rateable valuation of the property.

• (b) Any apportionment required by this subsection shall be made by the inspector according to the best of his or her knowledge and judgment.

• (c) An apportionment made under paragraph (b) may be amended by the Appeal Commissioners or by the Circuit Court on the hearing or the rehearing of an appeal against an assessment made on the basis of the apportionment; but, on the hearing or the rehearing of any such appeal, a certificate of the Commissioner of Valuation tendered by either party to the appeal and stating, as regards property valued under the Valuation Acts as a unit, the amount of the rateable valuation of the property attributable to any part of the property shall be evidence of the amount so attributable.

86 Cost of registration of trade marks. [FA71 s5]

86.—Notwithstanding anything in section 81, in computing the amount of the profits or gains of any trade, there shall be allowed to be deducted as expenses any fees paid or expenses incurred in obtaining for the purposes of the trade the registration of a trade mark or the renewal of registration of a trade mark.

87 Debts set off against profits and subsequently released. [FA70 s24(1) and (2)(a)]

87.—(1) Where, in computing for tax purposes the profits or gains of a trade or profession, a deduction has been allowed for any debt incurred for the purposes of the trade or profession, then, if the whole or any part of that debt is thereafter released, the amount released shall be treated as a receipt of the trade or profession arising in the period in which the release is effected.

• (2) If in any case referred to in subsection (1) the trade or profession has been permanently discontinued at or after the end of the period for which the deduction was allowed and before the release was effected, or is treated for tax purposes as if it had been so discontinued, section 91 shall apply as if the amount released were a sum received after the discontinuance.

88 Deduction for gifts to Enterprise Trust Ltd. [FA92 s56; FA96 s56(b); FA97 s64]

88.—(1) In this section, “the company” means the company incorporated on the 30th day of October, 1991, as The Enterprise Trust Limited.

• (2) This section shall apply to a gift of money which—

• (a) on or before the 31st day of December, 1999, is made to the company and accepted by it,

• (b) is to be applied by the company solely for the objects set out in its memorandum of association,

• (c) apart from subsection (3) would not be deductible in computing for the purposes of corporation tax the profits or gains of a trade or profession, and

• (d) is not income to which section 792 applies.

• (3)
• (a) Subject to paragraph (b) and subsection (2), where a company (in this section referred to as a “donor”) makes a gift to which this section applies and claims relief from tax by reference to the gift, the net amount of the gift shall be treated for the purposes of corporation tax as—

• (i) a deductible trading expense of a trade carried on by the donor, or

• (ii) an expense of management deductible in computing the total profits of the donor,

incurred by it in the accounting period in which the gift is made.

• (b) In determining for the purposes of paragraph (a) the net amount of the gift, the amount or value of any consideration received by a donor as a result of making the gift, whether received directly or indirectly from the company or any other person, shall be deducted from the amount of the gift, and relief under this section shall not be given to a donor for an accounting period—

• (i) if the net amount of the gift (or the aggregate of the net amounts of gifts) made by the donor in that accounting period, being a gift or gifts, as the case may be, to which this section applies, does not exceed £500,

• (ii) to the extent to which the net amount of the gift (or the aggregate of the net amounts of gifts) made by the donor in that accounting period, being a gift or gifts, as the case may be, to which this section applies, exceeds £100,000,

• (iii) in respect of a gift made at any time in the year ending on the 31st day of December in the year 1998 or 1999, if at that time the aggregate of the net amounts of all gifts to which this section applies made to the company within that year exceeds £1,500,000.

• (4) A claim under this section shall be made with the return required to be delivered under section 951 for the accounting period in which the payment is made.

• (5) Where a donor makes a gift in respect of which relief is not to be given by virtue of subparagraph (iii) of subsection (3)(b), the company shall, by notice in writing given to the donor within 30 days of the making of the gift, advise the donor accordingly.

• (6) Where a gift to which this section applies is made by a donor in an accounting period of the donor which is less than 12 months, the amounts specified in subparagraphs (i) and (ii) of subsection (3)(b) shall be proportionately reduced.

CHAPTER 7 Special measures on discontinuance of, and change of basis of computation of profits or gains of, a trade or profession

89 Valuation of trading stock at discontinuance of trade. [ITA67 s62(1) (apart from proviso) and (2); FA70 s23(4)]

89.—(1) (a) In this section, “trading stock” means, subject to paragraph (b), property of any description, whether real or personal, which is either—

• (i) property such as is sold in the ordinary course of the trade in relation to which the expression is used or would be so sold if it were mature or if its manufacture, preparation or construction were complete, or

• (ii) materials such as are used in the manufacture, preparation or construction of property such as is sold in the ordinary course of that trade.

• (b) For the purposes of this section, “trading stock”, in relation to a trade, includes any services, article or material which, if the trade were a profession, would be treated as work in progress of the profession for the purposes of section 90, and references to the sale or transfer of trading stock shall be construed accordingly.

• (c) References in this section to a trade having been discontinued or to the discontinuance of a trade shall be construed as not referring to or including any case where such trade was carried on by a single individual and is discontinued by reason of such individual's death (whether such trade is or is not continued by another person after such death), but shall be construed as referring to and including every other case where a trade has been discontinued or is, by virtue of any of the provisions of the Tax Acts, treated as having been discontinued for the purpose of computing tax.

• (2) In computing the profits or gains of a trade which has been discontinued, any trading stock belonging to the trade at the discontinuance of the trade shall be valued in accordance with the following provisions:

• (a) in the case of any such trading stock—

• (i) which is sold, or is transferred for valuable consideration, to a person who carries on or intends to carry on a trade in the State, and

• (ii) the cost of which to such person on such sale or transfer may be deducted by such person as an expense in computing for any purpose of the Tax Acts the profits or gains of the trade carried on or intended to be carried on by such person,

the value of such trading stock shall be taken to be the price paid for such trading stock on such sale or the value of the consideration given for such trading stock on such transfer, as the case may be;

• (b) in the case of any other such trading stock, the value of such other trading stock shall be taken to be the amount which it would have realised if it had been sold in the open market at the discontinuance of the trade.

90 Valuation of work in progress at discontinuance of profession. [FA70 s23(1) to (3) and (5); FA81 s9(d)]

90.—(1) Where, in computing for any of the purposes of the Tax Acts the profits or gains of a profession which has been discontinued, a valuation is taken of the work of the profession in progress at the discontinuance, that work shall be valued as follows:

• (a) if the work is transferred for money or any other valuable consideration to a person who carries on or intends to carry on a profession in the State, and the cost of the work may be deducted by that person as an expense in computing for any such purpose the profits or gains of that profession, the value of the work shall be taken to be the amount paid or other consideration given for the transfer;

• (b) if the work is not to be valued under paragraph (a), its value shall be taken to be the amount which would have been paid for a transfer of the work on the date of the discontinuance as between parties at arm's length.

• (2) Where a profession is discontinued and the person by whom it was carried on immediately before the discontinuance so elects, by notice in writing sent to the inspector at any time within 24 months after the discontinuance, the amount, if any, by which the value of the work in progress at the discontinuance (as ascertained under subsection (1)) exceeds the actual cost of the work shall not be taken into account in computing the profits or gains of the period immediately before the discontinuance, but the amount by which any sums received for the transfer of the work exceed the actual cost of the work shall be included in the sums chargeable to tax under section 91 as if it were a sum to which that section applies received after the discontinuance.

• (3) Subsections (1) and (2) shall apply where a profession is treated for any of the purposes of the Tax Acts as permanently discontinued as they apply in the case of an actual discontinuance, but shall not apply in a case where a profession carried on by a single individual is discontinued by reason of such individual's death.

• (4) References in this section to work in progress at the discontinuance of a profession shall be construed as references to—

• (a) any services performed in the ordinary course of the profession, the performance of which was wholly or partly completed at the time of the discontinuance and for which it would be reasonable to expect that a charge would have been made on their completion if the profession had not been discontinued, and

• (b) any article produced, and any such material as is used, in the performance of any such services,

and references in this section to the transfer of work in progress shall include references to the transfer of any benefits and rights which accrue, or might reasonably be expected to accrue, from the carrying out of the work.

91 Receipts accruing after discontinuance of trade or profession. [FA70 s20(1) to (4) and (5)(b), (c) and (d)]

91.—(1) Subject to subsection (2), this section shall apply to all sums arising from the carrying on of a trade or profession during any period before the discontinuance of the trade or profession (not being sums otherwise chargeable to tax), in so far as the amount or value of the sums was not taken into account in computing the profits or gains for any period before the discontinuance, and whether or not the profits or gains for the period were computed on an earnings basis or on a conventional basis.

• (2) This section shall not apply to any of the following sums—

• (a) sums received by a person beneficially entitled to such sums who is not resident in the State, or by a person acting on such person's behalf, which represent income arising directly or indirectly from a country or territory outside the State,

• (b) a lump sum paid to the personal representatives of the author of a literary, dramatic, musical or artistic work as a consideration for the assignment by them, wholly or partially, of the copyright in the work,

• (c) sums realised by the transfer of trading stock belonging to a trade at the discontinuance of the trade or, in a case in which the profits or gains of a profession were computed on an earnings basis at the discontinuance of the profession, sums realised by the transfer of the work of the profession in progress at the discontinuance, and

• (d) sums arising to an individual from a work which is such that any profits or gains that might have arisen to the individual from its publication, production or sale, as the case might be, would in accordance with section 195(3) have been disregarded for the purposes of the Income Tax Acts if they had arisen before the discontinuance of that individual's profession.

• (3) Where any trade or profession, the profits or gains of which are chargeable to tax under Case I or II of Schedule D, has been permanently discontinued, tax shall be charged under Case IV of that Schedule in respect of any sums to which this section applies received after the discontinuance subject to any such deduction as is authorised by subsection (4).

• (4) In computing the charge to tax in respect of sums received by any person which are chargeable to tax by virtue of this section (including amounts treated as sums received by such person by virtue of section 87), there shall be deducted from the amount which apart from this subsection would be chargeable to tax—

• (a) any loss, expense or debit (not being a loss, expense or debit arising directly or indirectly from the discontinuance itself) which, if the trade or profession had not been discontinued, would have been deducted in computing for tax purposes the profits or gains of the person by whom the trade or profession was carried on before the discontinuance, or would have been deducted from or set off against those profits or gains as so computed, and

• (b) any capital allowance to which the person who carried on the trade or profession was entitled immediately before the discontinuance and to which effect has not been given by means of relief before the discontinuance.

• (5) For the purposes of this Chapter—

• (a) the profits or gains of a trade or profession in any period shall be treated as computed by reference to earnings where all credits and liabilities accruing during that period as a consequence of the carrying on of the trade or profession are taken into account in computing those profits or gains for tax purposes, and not otherwise, and “earnings basis” shall be construed accordingly,

• (b) the profits or gains of a trade or profession in any period shall be treated as computed on a conventional basis where they are computed otherwise than by reference to earnings, and

• (c) the value of any sum received in payment of a debt shall be treated as not taken into account in the computation to the extent that a deduction has been allowed in respect of that sum under section 81(2)(i).

92 Receipts and losses accruing after change treated as discontinuance. [FA70 s22]

92.—(1) This section shall apply in any case where, as a result of a change in the persons engaged in carrying on a trade or profession, the trade or profession is treated for any of the purposes of the Tax Acts as if it had been permanently discontinued and a new trade or profession set up and commenced.

• (2)
• (a) Sections 91 and 95 shall apply in the case of any such change as if the trade or profession had been permanently discontinued.

• (b) Notwithstanding paragraph (a), where the right to receive any sums to which section 91 applies is or was transferred at the time of the change to the persons carrying on the trade or profession after the change, tax shall not be charged by virtue of that section, but any sums received by those persons by virtue of the transfer shall be treated for all purposes as receipts to be taken into the computation of profits or gains of the trade or profession in the period in which they are received.

• (3) In computing for tax purposes the profits or gains of the trade or profession in any period after the change, there may be deducted a sum equal to any amount proved during that period to be irrecoverable in respect of any debts credited in computing for tax purposes the profits or gains for any period before the change (being debts the benefit of which was assigned to the persons carrying on the trade or profession after the change), in so far as the total amount proved to be irrecoverable in respect of those debts exceeds any deduction allowed in respect of them under section 81(2)(i) in a computation for any period before the change.

93 Cash basis, etc: relief for certain individuals. [FA70 s25]

93.—(1) In this section—

“the net amount” with which a person is chargeable to tax under section 91 means the amount with which such person is so chargeable after making any deduction authorised by section 91(4) but before giving any relief under this section;

“relevant date” means—

• (a) in relation to tax under section 91, the date of the permanent discontinuance, and

• (b) in relation to tax under section 94, the date of the change of basis.

• (2) Where an individual born before the 6th day of April, 1919, or the personal representative of such an individual, is chargeable to tax under section 91 or 94 and—

• (a) the individual was engaged in carrying on the trade or profession on the 4th day of August, 1970, and

• (b) the profits or gains of the trade or profession were not computed by reference to earnings in the period in which the date specified in paragraph (a) fell, or in any subsequent period ending before or on the relevant date,

the net amount with which such individual is so chargeable to tax shall be reduced by multiplying that net amount by the fraction specified in subsection (4).

• (3) Where section 94 applies in relation to a change of basis taking place on a date before the 4th day of August, 1970, then, in relation to tax chargeable by reference to that change of basis, subsection (2) shall apply as if—

• (a) that earlier date were substituted for the date specified in paragraph (a) of that subsection, and

• (b) paragraph (b) of that subsection were deleted.

• (4) The fraction referred to in subsection (2) is—

• (a) where on the 6th day of April, 1970, the individual had not attained the age of 52 years, nineteen-twentieths,

• (b) where on that date the individual had attained the age of 52 years, but had not attained the age of 53 years, eighteen-twentieths, and so on, reducing the fraction by one-twentieth for each year the individual had attained, up to the age of 64 years,

• (c) where on that date the individual had attained the age of 65 years or any greater age, five-twentieths.

94 Conventional basis: general charge on receipts after change of basis. [FA70 s26(1) to (4)]

94.—(1) Where in the case of any trade or profession the profits or gains of which are chargeable to tax under Case I or II of Schedule D there has been—

• (a) a change from a conventional basis to the earnings basis, or

• (b) a change of conventional basis which may result in receipts dropping out of computation,

tax shall be charged under Case IV of Schedule D in respect of sums to which this subsection applies which are received after the change and before the trade or profession is permanently discontinued.

• (2) Subsection (1) shall apply to all sums arising from the carrying on of the trade or profession during any period before the change (not being sums otherwise chargeable to tax) in so far as their amount or value was not taken into account in computing the profits or gains for any period.

• (3) Where in the case of any profession the profits or gains of which are chargeable to tax under Case II of Schedule D—

• (a) there has been a change from a conventional basis to the earnings basis, or a change of conventional basis, and

• (b) the value of work in progress at the time of the change was debited in the accounts and allowed as a deduction in computing profits for tax purposes for a period after the change,

then, in so far as no counterbalancing credit was taken into account in computing profits for tax purposes for any period ending before or on the date of the change, tax shall be charged under subsection (1) in respect of that amount for the year of assessment in which the change occurred as if that amount were a sum to which subsection (2) applies and the change of basis were a change of the kind described in subsection (1).

• (4) In this section, references to work in progress at the time of a change of basis shall be construed in accordance with section 90(4) but as if references in that section to the change of basis were references to the discontinuance.

• (5) There shall be a change from a conventional basis to the earnings basis at the end of a period, the profits or gains of which were computed on a conventional basis, if the profits or gains of the next succeeding period are computed by reference to earnings and, if the profits or gains of 2 successive periods are computed on different conventional bases, a change of conventional basis shall occur at the end of the earlier period.

95 Supplementary provisions as to tax under section 91 or 94. [FA70 s21; CTA76 s164 and Sch3 PtII]

95.—(1) In the case of a transfer for value of the right to receive any sums described in section 91(1) or 94, any tax chargeable by virtue of either of those sections shall be charged in respect of the amount or value of the consideration (or, in the case of a transfer otherwise than at arm's length, in respect of the value of the right transferred as between parties at arm's length), and references in those sections to sums received shall be construed accordingly.